18. The constraint at Johngrass Corporation is time on a particular machine. The

Question

18. The constraint at Johngrass Corporation is time on a particular machine. The company makes three products that use this machine. Data concerning those products appear below:

Assume that sufficient time is available on the constrained machine to satisfy demand for all but the least profitable product. Up to how much should the company be willing to pay to acquire more of the constrained resource? (Round your intermediate calculations and final answer to 2 decimal places.)

A $75.68 per unit

B $39.36 per unit

C $15.75 per minute

D $8.37 per minute

19. The following are the Jensen Corporation's unit costs of making and selling an item at a volume of 1,600 units per month (which represents the company's capacity):

A $9.70 full cost

B $5.30 variable manufacturing cost

C $2.60 variable selling and administrative cost

D $6.00 unit product cost

18. The constraint at Johngrass Corporation is time on a particular machine. The company makes three products that use this machine. Data concerning those products appear below:

Explanation / Answer

(18)

Answer is option (D) $8.37 per minute.

Working Note:

(Selling price – variable cost) / Minutes on the constraint.

($199.13 - $159.77) / 4.70 = $8.37 per minute.

(19)

Answer is option (B) $5.30 variable manufacturing cost.

Working Note:

(Direct Materials + Direct labor + Variable overhead)

(1.6 + 2.6 + 1.1) = $5.30.

Fixed costs, both manufacturing and selling and administrative, are constant so will not be consider in this decision making while selling and administrative expenses also are not considered in such decision making condition.

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